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Do you think its unacceptable to criticize the best product in a category because there's nothing better than it?

His point was DVCSs like Git and Mercurial may have been an improvement in lots of aspects of version control system but they have taken some steps backwards as well.

I thought he was kidding about the crazy juice...

Facebook and google are working on turning mercurial into such a VCS, although it will still be a DVCS allowing fully local commits (albeit without storing the full history on all clients).

Take a look at the remotefilelog extension.

Why would anybody writing a new VCS use Github to host it? Wouldn't it make more sense to use the new VCS itself. You know, eat your own dogfood?

Not everyone is using GitHub for source hosting, there quite a few companies, which use internally some other VCS (like Perforce) and publish the sources on GitHub.